This Guide to Guidance (the Guide) has been primarily designed to assist public officials responsible for trans-European transport network (TEN-T) projects to improve their understanding of the key issues and procedures involved in the procurement of TEN-T projects with PPP (Public Private Partnerships) arrangements.
A PPP arrangement differs from conventional public procurement in several respects. In a PPP arrangement the public and private sectors collaborate to deliver public infrastructure projects - such as roads, railways, airports, etc. -which typically share the following features:
□ A long-term PPP contract between a public contracting authority and a private sector PPP company based on the procurement of services, not of assets.
□ The transfer of certain project risks to the private sector, notably in the areas of design, build, operations and finance.
□ A focus on the specification of project outputs rather than project inputs, taking account of the "whole life cycle" implications for the project.
□ The application of private financing (often 'project financing') to underpin the risks transferred to the private sector.
□ Payments to the private sector which reflect the services delivered. The PPP company may be paid either by users (e.g. toll motorway); by the public contracting authority (e.g. availability payments, shadow tolls); or by a combination of both (e.g. low user charges together with operating public subsidies).
The rationale for using a PPP arrangement instead of conventional public procurement rests on the proposition that optimal risk sharing with the private partner delivers better Value for Money for the public sector.
PPP arrangements are, however, more complex than conventional public procurement. They require detailed project preparation and planning, proper management of the procurement phase to incentivise competition among bidders. They also require careful contract design to set service standards, allocate risks and reach an acceptable balance between commercial risks and returns. These features require skills in the public sector which are not typically called for in conventional procurement.
This Guide seeks to identify the "best of breed" guidance currently available from PPP guidelines worldwide and selected professional publications. By providing a sourcebook of good PPP practice, it is designed to help public officials address the challenges of PPPs.
The need for well-structured PPPs has never been greater. EU Member States and the European Commission have placed emphasis on the need to accelerate investments in infrastructure, notably investments in TEN-T projects, by mobilising public and private sector finance through PPP arrangements as part of a strategy to address the economic downturn.1
This Guide has a particular focus on TEN-T. Issues of particular relevance to TEN-T are italicized in blue text boxes. Where guidance particularly relevant to these issues exists, this is identified. However, in some cases, the available guidance is insufficiently specific to deal with such issues. In this case, the public authority should seek advice from suitably qualified advisors. The policy objective of TEN-T is the establishment of a single, multimodal network covering both traditional ground-based structures and equipment (including intelligent transport systems) to enable safe and efficient traffic across the EU and support the European internal market. The transport infrastructure components of TEN-T are road, rail and inland waterway networks, motorways of the sea, seaports and inland waterway ports, airports and other interconnection points between modal networks2 While the investment needs of the TEN-T network are high, many of the principles involved in applying for PPP funding will be applicable to other sectors, and experience gained elsewhere will be applicable to the TEN-T network. □ Technology risks in complex communication systems (e.g. for rail, □ Interface risks related to the interplay of particularly complex services (e.g. signaling, maintenance, operations, and communications in rail projects); or □ Counterparty risks in cross border projects. |
The rest of this introductory chapter summarises
the legal and regulatory framework for PPPs in the EU, describes the intended audience for the Guide, summarises the contents of the document, and explains the structure of the four core chapters (Chapters 2 to 5) with indications of how best to use the Guide.
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1 See Commission Communication: COM(2009) 615 of 19 November 2009, Mobilising private and public investment for recovery and long term structural change: developing Public Private Partnerships http://www.eib.org/epec/infocentre/documents/Commission%20Communication%20on%20PPP-en.pdf
2 Access http://ec.europa.eu/transport/infrastructure/tent_policy_review/tent_policy_review_en.htm for policy documentation about TEN-T